Central Bridging: Loans to Resolve Tax Issues with HMRC

As we move into the Autumn HMRC are ratcheting up the pressure on taxpayers, including those who still have outstanding loans from Employee Benefit Schemes (EBTs). Over recent years there has been an increasing focus by the government on what it considers to be corporate tax avoidance.

Consequently, HMRC, whose collection powers have been considerably bolstered by the introduction of Accelerated Payment Notice (APN) and Partner Payment Notice (PPN) legislation, have steadily increased pressure on companies that owe tax or have set up EBTs and have yet to settle. APNs and PPNs are now seen as a key weapon in the battle to deliver increased revenue to the Treasury via a 'fairer' taxation system.

Essentially APNs are designed to inform companies that they owe taxes which they might otherwise have believed to be beyond the reach of HMRC. The notices amount to demands for payment of monies owed within a period of no longer than 90 days. Crucially they do not include any scope for negotiation or appeal on the part of the recipients.

Increasing numbers of directors and sole traders right across the UK are being confronted by sizable tax demands against them and their organisations that they haven't budgeted for. With such a short period for the associated payments to be made the consequences of receiving an APN can mean serious financial problems.

With specific regard to EBTs a series of recent court decisions, most notably the long running and high-profile Rangers case, have all gone against the taxpayer. Ultimately the Supreme Court has ruled against Rangers and agreed with HMRC that loans made to employees under the clubs EBT Scheme were in fact remuneration and so subject to tax and NIC.

Whilst many specialist advisors and tax professionals have contended that the Rangers decision was not 'case specific' and therefore couldn't cover all EBTs this hasn't stopped HMRC from issuing increasing numbers of Follower Notices, the prelude to APNs. HMRC's interpretation has been unequivocal - they believe that many other tax payers have been using the same "scheme" and if they have yet to settle they will be pursued. Indeed, if taxpayers don't comply with these Follower Notices and they subsequently lose their case, HMRC will be able to apply a penalty of 50% of the tax found to be payable.

April 2019 will see the introduction of the new 'Disguised Remuneration' tax charge for all EBT loans where no settlement has been agreed with HMRC. The clock is most definitely ticking with many companies and individuals facing serious tax bills on the 5th April with very limited means to mitigate these. The key to dealing with APN and FN issues (they can sometimes be issued concurrently) is to communicate as fast as possible with HMRC.

There are a small number of bridging lenders that have the knowledge and experience to deal directly with HMRC and provide the bespoke financial solutions, secured on UK property assets, to allow APNs to be settled. If an APN can be settled quickly it often avoids litigation, winding up and bankruptcy proceedings.

Still unsure and need to explore your options? Why not consult an expert?

Central Bridging are experts with a long track record helping clients to resolve even the most complex and contentious issues with HMRC. Mindful of the developing situation we have strengthened our Team over the summer months which now includes former senior HMRC personnel.

We will be monitoring all announcements and developments to ensure that our tailored solutions can best assist clients once they have decided how to proceed.

Ultimately, when a satisfactory settlement has been agreed by all parties our diverse funding base means that we will be able to offer an extensive range of products and the individually tailored solutions that will allow clients to finally draw a line under the matter and move on with their lives.

We are a principal lender offering a range of loan facilities for business use from £100K to £2.5M over periods from 3 to 24 months. Our loans are secured on freehold property across England and Wales.

Crucially you will always speak to a decision maker who will take time to understand you and your situation and unlike some of the bigger banks will then tailor a solution that best suits your needs rather than our own.

Why not give us a call on 03332 400 506 for an informal chat about your options.